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Cost Reimbursement and Step Allocation Method Hope Clinic is a not-for-profit outpatient facility that provides medical services to both fee-paying patients and low-income government-supported patients. Reimbursement from the government is based on total actual costs of services provided, including both direct costs of patient services and indirect operating costs. Patient services are provided through two producing departments, Medical Services and Ancillary Services (includes X-ray, therapy, etc.). In addition to the direct costs of these departments, the clinic incurs indirect costs in two service departments, Administration and Facilities. Administration costs are allocated first based on the number of full-time employees, and Facilities costs are then allocated based on space occupied. Costs and related data for the current month are as follows: Direct costs Number of employees Amount of space occupied (square feet) Number of patient visits Medical Ancillary Administration Facilities Services Services $91,000 $43,050 $1,043,980 $490,000 6 4 8 4 2,000 600 7,500 2,500 7,975 3,000 Required a. Using the step method, prepare a schedule allocating the common service department costs to the producing departments. Service Administration Facilities Producing Medical $ Ancillary $ $ Direct costs Cost allocations: Administration: (1) To Facilities: (2) To Medical: (3) To Ancillary: Facilities: (4) To Medical: (5) To Ancillary: Total costs $ b. Determine the amount to be reimbursed from the government for each low-income patient visit. Ancillary Medical Cost per patient visit $

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